The global economy is projected to grow by 1.7% in 2023 and 2.7% in 2024, the World Bank has said.
The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 percent of advanced economies and nearly 70 percent of emerging market and developing economies.
According to the multilateral lender, per-capita income growth in emerging market and developing economies is projected to average 2.8%—a full percentage point lower than the 2010-2019 average over the next two years.
The trend would worsen in Sub-Saharan Africa—which accounts for about 60 percent of the world’s extreme poor—growth in per capita income over 2023-24 is expected to average just 1.2 percent, a rate that could cause poverty rates to rise, not fall.
“The crisis facing development is intensifying as the global growth outlook deteriorates,” said World Bank Group President David Malpass. Adding that “Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates.
Kenya’s medium term growth prospects remain positive with Gross Domestic Product (GDP) projected to grow by 5.2 percent on average in 2023–24 notwithstanding current global and domestic shocks.
In response to the inflationary pressures, the Central Bank of Kenya (CBK) has raised the policy rate thrice since May 2022 by a cumulative 175 basis points to reach 8.75 percent.
“Kenya can further leverage the agriculture sector to spur growth, poverty reduction, and food security,” said Keith Hansen, World Bank Country Director for Kenya.
The global growth downturn, according to the World Bank is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine.
Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession.
This, WB said, would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
In the United States, growth is forecast to fall to 0.5 percent in 2023—1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.
In 2023, euro-area growth is expected at zero percent—a downward revision of 1.9 percentage points. In China, growth is projected at 4.3 percent in 2023—0.9 percentage point below previous forecasts.